CTIA Conference Notebook...
FCC 8th-floor wireless advisers stressed the complexity of the pending 800 MHz proposals at the FCC, at a CTIA panel, although several noted they were heartened by the level of economic analysis in data submitted to the FCC in the proceeding. “The FCC needs data to do its job,” said Paul Margie, aide to FCC Comr. Copps: “The reason this has taken so long is because we had to figure out is there interference, how much interference is there, where is the interference, what is the delta between the interference we have now versus the two different plans, how much is it going to cost. And all of this took a certain amount of time because we didn’t know it beforehand.” Asked by CTIA Asst. Vp-Regulatory Policy Christopher Guttman-McCabe how spectrum overlays could be “policed,” Margie said most of the time it’s good to have additional flexibility. “But the more flexibility you give to somebody to operate in different ways, the more chance you have that those ways are going to conflict with one another. Across the band we've been adding more flexibility to people’s licenses. May we -- by doing that -- be creating other 800 [MHz-type] issues at other places around the spectrum? There’s a possibility we might be doing that.” Among the concerns that have surfaced repeatedly at the CTIA show here this week is the possibility of a patchwork of new state regulations to address issues such as service quality. Asked by Guttman-McCabe what role the FCC could play in this area, Jennifer Manner, adviser to Comr. Abernathy, said “unfortunately, we don’t have preemption authority, which is a problem.” The industry’s voluntary code of best practices, addressing issues such as trial periods for new service and billing, has been a “good response.” Manner said: “Your success should guide the states. You have to do a lot of education and be responsive. That’s not really something the Commission could step in and do.” Asked about the extent to which the FCC does cost- benefit analysis of the financial impact of rulemakings it considers, Sheryl Wilkerson, Chmn. Powell’s wireless aide, said it’s “one of the first things we look at when an item does come up to us.” Industry has been helpful in providing data on the costs of proposals such as those under consideration to mitigate public safety interference at 800 MHz and a recent International Bureau item on orbital debris, Wilkerson said. Barry Ohlson, aide to Comr. Adelstein, said the record assembled at the FCC on the 800 MHz proceeding has been among the better ones before the agency “in terms of economic analysis.” While there has been different information submitted by competing sides in the 800 MHz proceeding, Ohlson said the data submitted still has been helpful. Separately, FCC Chief of Staff Bryan Tramont asked what the regulatory implications were of wireline company ownership of wireless companies. “The wireless industry is incredibly competitive,” said Cingular Wireless Vp-Federal Regulatory Affairs Brian Fontes. “With respect to any wireline affiliation that any wireless carrier would have, if there’s any opportunities to behave irrationally in the marketplace, I think that would be remedied very quickly just by the competitive nature of the marketplace.” -- MG
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In a counterpoint to a CEO panel discussion Wed. morning in which wireless company heads voiced fear about impending state regulations, NARUC Pres. and Ga. PSC Comr. Stan Wise said later in the day he wasn’t interested in imposing additional service quality regulations as long as the industry continued to make progress on voluntary efforts. Wise said he didn’t agree with Cal. PUC Comr. Carl Wood, who has advocated a consumer bill of rights for telecom services that has raised the ire of wireless firms concerned it could be a model for adoption elsewhere. Echoing recent congressional testimony he gave on behalf of NARUC, Wise said he agreed with FCC Chmn. Powell that a relatively light regulatory touch is needed for VoIP, as long as the subsidies that have been built into telecom regulations for decades are still addressed. “The spin here is not that we want to continue to regulate or find new areas to regulate,” Wise said. CTIA’s voluntary best practices, designed to address service quality issues, are important, he said. “The initiative of this body to go ahead and have a self-policing of regulation is vital,” Wise said. “It’s muted the voices at the national association that want to find ways to regulate your industry.” He stressed a message that federal policy-makers have sent at the CTIA show this week, which is that the group should follow through on the voluntary code. “It truly has to be self-policing,” Wise said: “If somebody is a rogue and they are truly not living up to that standard that garners that seal of approval, then you have to take charge, you have to be responsible.” Alltel CEO Scott Ford said CTIA has been following through on the voluntary consumer code. Consumer groups and some state PUC officials had raised concerns when CTIA released the voluntary code last year, partly due to what they viewed as a lack of enforcement mechanisms. CTIA is now going through self- policing action on the code and Ford said there might be one or 2 elements of the code in every company where “we are not getting compliance to where it should be,” he said. “You will see that taken up a notch.” Wise said: “It’s important that you continue to make progress and do your jobs and stay out of the sights of state commissions.”
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Lack of scale is one of the challenges that the wireless industry continues to face, as well as the ability to eliminate uncertainty to provide greater assurance for capital investment, J.P. Morgan telecom analyst Tom Lee said in a late Wed. session at the CTIA Wireless 2004 show here. One challenge connected to unlicensed spectrum is that offerings such as Wi-Fi and WiMAX over time “will have a tendency to turn a service model into a product,” Lee said: “We might really start to see what could have been a service business around 3G become something more that’s more related to end-user devices.” Elsewhere, Lee said the $150 billion invested in the wireless industry in the past 15 years would have had a greater return if spent in the wireline sector. “We really have to remember that as much as the [wireless] business has really been innovating and driving lower pricing… what the business is really lacking is distribution scale, they spend way too much on marketing.” In S.D., there are 9 counties where cellphone penetration is higher than landline penetration, Lee said. But in those communities, there’s very little universal service funding that’s coming in, he said. “What we have in the wireless industry, and why it has been able to sustain a capital drive as long as it has, is the technology and the path that we have toward increasing over time,” said FCC Wireless Bureau Chief John Muleta: “I think there is a tremendous amount of future capacity built into this business. People are taking a risk, that’s what capital is all about… I think there’s a lot of hope in this industry.”
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Aside from VoIP and uncertainty over new spectrum proposals that could allow overlay technologies in licensed spectrum, another prevalent theme at the conference this week, which ended Wed., was the potential impact of a Communications Assistance for Law Enforcement Act (CALEA) petition that the Justice Dept. and FBI filed at the FCC earlier this month. CALEA implementation has been structured so law enforcement would reimburse phone companies for providing access to their networks, Alltel CEO Scott Ford said. In part, the lengthy petition submitted by the law enforcement agencies suggests that such costs could now be passed on to consumers. “Now they are no longer even going to pretend they are going to pay for it,” Ford said. Ford said he’s also concerned by a part of the proposal that would require pre-approval of new technologies as being compliant with CALEA access requirements. “Part of me just laughs at that. Part of me says that’s a serious problem,” he said. Ford said Alltel will comply with whatever new requirements emerge from the process. But he expressed concern that a comment period the FCC opened on the petition last week isn’t long enough given the complexity of the questions teed up by the law enforcement agencies. Lauding Alltel’s compliance with CALEA measures, Acting NTIA Dir. Michael Gallagher also noted that the DoJ and FBI in the current homeland security environment face political, financial and regulatory obstacles in carrying out their missions. “They are all manifested in this document,” he said.
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Def Jam Records Chmn. Russell Simmons, who also is chmn. of Rush Communications, told a packed CTIA Wireless 2004 keynote audience this week that hip-hop artists have been setting pop culture tastes about wireless products for years. Citing hip-hop artists who embraced the first wave of wireless pager technology, Simmons, clad in a bright pink sweater and matching baseball cap, said: “These guys have been choosing your products and deciding which of your products are good for a long time.” Simmons reminded the audience that the number one wireless ringtone in the U.S. now is a song by rap artist 50 Cent. But Simmons stressed that without network reliability, new forms of content and application won’t reach taste-makers that shape pop culture. “If your phone doesn’t ring in N.Y. and L.A., how do you expect to get a buzz from an industry that lives in N.Y. and L.A.?” he said. Simmons, who helped develop a diamond encrusted Motorola handset design, said the wireless industry still has to focus on the basics: “A phone has to be a phone, let’s work on that.” Taking note of some of the new MP3-equipped handsets that were on display this week at the show, Simmons said that’s a huge market opportunity to draw the business of young people. “What do they want? All the music all the time,” he said. “You guys can be a big part of that. Culturally, they [young people] have decided they want more music now than ever before.”